Municipalities owe Eskom R2.6 billion in tariff arrears

Eskom’s annual report for the year ending March 31 2014 indicates that municipal debtors have more than doubled, from R1.2 billion in the previous year to R2.6 billion.

Responding to a question from Transform SA on why Eskom had let the amount accumulate to such an astronomical level when it needed funds for projects, Executive, Erica Johnson, acknowledged that the organisation’s traditional debt collection mechanisms “does not have the desired effect anymore”. She revealed that the utility had restructured the debt of some municipalities and had recently given notice to three municipalities in the Free State that their power supply would be disconnected if they did make payment.

The main reason why municipalities are struggling is that there has been a reduction in the funding that they get from the National Treasury, according to the integrated annual report.

The uncollected revenue has left a hole in Eskom’s coffers. Eskom has a R225 billion shortfall after Nersa granted only an 8% annual tariff increase instead of the 16% Eskom applied for.